NFIP Policyholders May Be Eligible For $30,000 in Rebuilding Aid

December 20, 2005, MONTGOMERY, Ala. -- Property owners with flood insurance polices who are required to meet costly new codes when rebuilding may be eligible to seek $30,000 from the National Flood Insurance Program (NFIP) to help pay for measures that will reduce the risk of future flood damage.

There are 44,091 flood policyholders in Alabama and, to date, 5,630 have filed claims as a result of Hurricane Katrina. Elevation is expected to be the main requirement when rebuilding in coastal flood areas.

The $30,000 is a policy benefit under the Increased Cost of Compliance (ICC) program. It is available to home or business owners whose structures are substantially or repeatedly damaged by flooding. The U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) administers the NFIP.

When a community participates in the NFIP, they adopt and enforce a floodplain management ordinance that minimizes future flood risks to new or existing construction. The ordinance requires that communities adhere to certain building requirements or set new standards for construction in flood-prone areas. The ICC program can help policyholders whose homes or businesses are located in these areas meet the requirements set by the ordinance.

Policyholders have four options they can choose from to bring their home or business into compliance with their community’s floodplain ordinance:

* Elevation-raises a home or business to or above the flood elevation level adopted by the community.
* Relocation-moves a home or business out of harm’s way.
* Demolition-tears down and removes flood-damaged buildings.
* Floodproofing-(primarily for non-residential buildings) makes a building watertight through a combination of adjustments or additions of features to the building that reduces the potential for flood damage.

If 50 percent or more of the market value of a home or business is damaged during a flood, a community may determine that building substantially damaged. If 25 percent of the market value of a home or business is damaged by floods twice in the last ten years, a community may determine that building repeatedly damaged. This determination establishes whether a structure is eligible for ICC coverage.

After the determination is made, a community official contacts the home or business owner to explain what the ordinance entails. The home or business owner then contacts the insurance company or agent who wrote his/her flood policy to file an ICC claim. The insurer will assign a representative who will help them process the ICC claim. Owners should get estimates from contractors on what the costs are to elevate, relocate, demolish, or floodproof their property.

ICC claim funds can only be used to pay for costs related to flood-damaged homes and businesses and can only be used for costs that bring homes or businesses up to floodplain management ordinance.

Property owners living in areas participating in the NFIP can purchase flood insurance from most major insurance carriers who sell homeowners or business policies or by calling the National Flood Insurance Program at 800-427-4661 or (TTY) 800-427-5593.